[72GTOMN]

I realize this isn't the place to look for tax advice, but I wanted to see what other's experiences were with paying capital gains tax selling classic cars. A few months ago I picked up my 1971 Lemans convertible for a rediculously cheap price. I was thinking of cleaning it up and selling it this spring and using the profit on my GTO (TKX 5 speed!). Then I remembered capital gains. I've bought and sold a few cars over the years but I usually lost money or broke even, laughable to even think of making money in this hobby. Looks like my best option may be to hang onto it for at least a year or maybe just hang onto it long term. Sucks that the government can never get enough.

[Held for Ransom]

Did you purchase it as an investment and plan on claiming it as such?

I wouldn't worry about claiming anything, personally.

[Chief of the 60's]

Cash doesn't talk

[Jerry H.]

I've bought and sold dozens of collector cars in the past 40 years. I've never paid any capital gains. Just don't go depositing over about 3K of cash at once. Unless it has changed, the bank keeps records for deposits over that amount. And if it's over 10k, they send a form in to the government.

[72projectbird]

Capital gains on a vehicle?

[72GTOMN]

I figured most people don't claim it on low to moderate priced cars. It's probably easy enough to produce expenses (including storage costs) to offset any perceived gains. What made me think about it was watching the movie Gran Torino over the holiday. In it he confesses to not paying taxes on a boat he sold. Then I did a Google search on the subject and technically anything that you sell that you get more for than you originally paid is subject to capital gains and Uncle Sam wants a cut. So if you bought a GTO new in 1968 for $3500 and sold it in 2021 for $50,000 you have to pay capital gains on the sale. Of course, if you keep detailed records on repairs, etc., you could probably reduce the gains down. All I would say is factor in storage costs for 53 years.

[Ben M.]

I can't imagine the IRS auditing you and slapping a tax bill down because you bought a car for $5,000 and sold it for $15,000 a year later. Not when there's so many corporations and rich dudes playing that game for millions of dollars a year in real estate investment.

While the law is technically written to require such things, usually only amounts greater than $10,000 are reported and kept track of - houses and the stock market mostly because that's where the big gains and games are played. And you can easily claim any maintenance and "improvements" you did in the ownership to knock that amount down.

[johnta1]

Or if you sell more than a certain amount of vehicles. They would claim you're a dealer/business. The DMV would probably get involved then also.
(State want your money also)

[Chief of the 60's]

Originally Posted by Ben M.

I can't imagine the IRS auditing you and slapping a tax bill down because you bought a car for $5,000 and sold it for $15,000 a year later. Not when there's so many corporations and rich dudes playing that game for millions of dollars a year in real estate investment.

While the law is technically written to require such things, usually only amounts greater than $10,000 are reported and kept track of - houses and the stock market mostly because that's where the big gains and games are played. And you can easily claim any maintenance and "improvements" you did in the ownership to knock that amount down.

The little guys are like shooting fish in a barrel. Much easier and less resistance than some corporation.

[Ben M.]

Originally Posted by johnta1

Or if you sell more than a certain amount of vehicles. They would claim you're a dealer/business. The DMV would probably get involved then also.
(State want your money also)

This is very true. Selling above a certain number gets you flagged in the DMV in many states.

[Bills Auto Works]

Honestly you are adding a worry to your life that you don't need to!

The comment about how many cars you sell triggered a memory...Back in the late 80's through the mid 90's I built/fixed a lot of cars to flip & in Ohio it was if you sold more than 6 per year, they wanted you to have a dealers license. My Wife, Mom, Dad & of course Me each had numerous cars in our names!

God Bless & Happy New Year
Bill
https://www.jalopyjournal.com/forum/...closed.614419/

[Stuart]

If you do your own taxes using tax software, you can plug in the numbers and determine what if any amount you are supposed to pay. What you actually do is your business, but I wouldn't post anything about it in a public place.